As part of its strategy for an “all-around digital experience” for members, Redwood Credit Union in Santa Rosa, California, is letting members receive digital replacement cards through its mobile banking app.
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The offering went live on Redwood’s app in October, allowing members to submit card replacement requests and receive digital substitutes from their mobile device. On Dec. 10, the credit union began allowing members to push the digital cards to digital wallets like Apple Pay and Google Pay to provide ease of access for in-person and online transactions.
“We’ve offered instant card issuing within our branches for years, but it’s become inconvenient for us by driving traffic at the branches … and it’s also inconvenient for the consumer to have to weave the time spent visiting a branch into their schedules,” said Todd Lindemann, senior vice president of payments at Redwood, while speaking at an artificial intelligence panel hosted by the cloud platform provider Neuton.ai.
Approximately 58% of the credit union’s current digital-banking members exclusively utilize its mobile app.As the pandemic hastened the shift in consumer transactions away from in-person interactions, the credit union was already positioned to meet consumer demands for more tech offerings using its “mobile first” mindset, Lindemann said.
“With what we’ve gone through with the pandemic, having that ‘mobile first’ mentality has allowed us to drive our payment options in the mobile space and tailor our offerings to the lives of our members,” Lindemann said.
As the coronavirus pandemic accelerated a shift to online shopping, credit unions such as Redwood have tried to adapt. Using digital issuance through its partnership with Visa, the credit union seeks to complement its strategy of bringing the suite of services offered in branches to its web and mobile platforms.
George Perry, a senior director of product management at Visa, said the card network is helping credit unions to simplify the process of building connections with digital-wallet providers, while overseeing any necessary technical maintenance. Software specifications that vary by provider can lengthen the time needed to develop and launch integrations, increasing the stress placed on a credit union’s budget.
“Each wallet provider has its own individual specifications for encryptions, which would normally require that credit unions like Redwood develop and maintain specialized integrations for each platform,” Perry said. “What we’ve done is aggregate those connections so clients only need to connect to our Visa SDK once, and we will handle the maintenance of the connections to account for any updates.”
When credit unions use proprietary software to build the service for adding virtual cards to third-party mobile wallets, it can sometimes take six to twelve months to do a single integration, Perry said. With Visa, that time frame gets cut to 90 days or less, he said.
Mobile wallets were used in 29% of all North American e-commerce transactions in 2020, just below the 32% for credit cards, according to research conducted by FIS, a core-banking software company in Jacksonville, Florida. Estimates suggest that figure will rise to over 40% by 2024.
Katherine Lucchese, a senior account executive at Visa, has been working with Redwood since she began managing clients in the card network’s Western region of the U.S. more than eight years ago. Throughout that partnership, the California credit union has consistently sought to use new services and technology that were available from Visa.
“When I look across the community segments that I’ve worked with for some time now, Redwood has always been a technologically sophisticated credit union and an early adopter that’s willing to try out new services or offerings that we might have, including the digital issuance of cards,” Lucchese said. “With regards to digital card issuing, they’re the institution that’s farthest ahead.”
Along with the cost-saving and ease-of-access benefits afforded to credit unions through the ability to issue digital replacement cards to members nearly instantly, there’s also added risk of fraud and theft.
Tony DeSanctis, a senior director at the Scottsdale, Arizona-based advisory firm Cornerstone Advisors, said that know-your-customer software and digital identification play a significant role in the instant issuing of credit and debit cards.
“There are third-party vendors that can offer KYC capabilities … but for credit unions to be absolutely certain in their due diligence, such solutions need to be monitored closely to see if there are any potential risks or flaws in those capabilities,” DeSanctis said.
Redwood monitors transactions for signs of fraud, watches member profiles for any change in contact information and reviews the history of the mobile device used in connection with any requests. Should members detect instances of fraud on their account, they can freeze any active cards and flag the unknown activity themselves via the RedwoodCU mobile app.
Making it easier to replace cards and use them in different wallet applications could encourage Redwood members to do more of their spending on the credit union’s cards, Lindemann said.
“People will generally always have their phone on them, as it’s become an integral part of their mindset and their daily routines,” Lindemann said. “Being able to have our card ‘top of wallet’ with our members, digital or physical, is how we can best serve members in a space that best fits their lifestyle.”
